Urban growth and aggregate growth in China

Abstract Using a spatial equilibrium model and data of 286 Chinese cities at the prefecture and above- prefecture level from 2002 to 2013, this study estimates the contribution of each city to national GDP growth. The results reveal several interesting patterns. First, what an individual city contributes to aggregate growth is not represented clearly by the city's GDP based on standard accounting calculation. Second, increased real wage dispersion across cities suppressed aggregate GDP by 25.41%. Finally, should cities with high productivity reduce their regulatory constraints to the national level, Chinese GDP would increase by 20.62%.